Greening the EU Budget: A Ray of Sunshine in an Otherwise Stormy Sky

Europe may not be dealing with freak weather events at the moment, but in economic and social terms the storm clouds over the continent have become a permanent feature on the landscape — for at least the past three years now — and the hard rain is now falling, in bucket loads. In the process, much needed action on climate change could be swept away in the deluge.

This past week has seen unprecedented, coordinated multi-country strikes, in Spain, Portugal, Greece, France, Germany and elsewhere, with working people seeing little alternative but to take to the streets in opposition to austerity measures. These measures are being doled out by a number of national governments as well as the venerable ‘troika’ of the IMF, the European Central Bank and the European Commission as a response to — or, as some argue, an exacerbating cause of — the ongoing Eurozone crisis that spiraled out of control following the global financial meltdown of autumn 2008.

Strange then that one of those bodies, the European Commission, Europe’s unelected executive arm, has been seeking for the last year to increase the size of the EU budget for the upcoming budgetary period of 2014-2020 to just over one trillion euros. As you can imagine, this has not gone down well in many quarters.

And one of the consequences is that commission proposals to green the budget could get lost in the kerfuffle. The idea is that 20 percent of the overall budget should go to initiatives and projects that would specifically tackle climate change, help spur growth in green jobs and provide welcome subsidies to Europe’s renewable energy sector.

Squabbling between states, that has intensified in recent weeks over potential reductions of 50 to 100 billion euros (an amount that could be in the order of 0.03 percent of overall EU GDP) have led European leaders to take their eyes off the green ball. The positive, transformational benefits that increased green spending can unlock, such as ramping up energy efficiency investments that can cut energy bills for businesses and households alike (rising energy bills are an acute topic in most EU countries at the moment), have been drowned out.

Until this week that is, but in rather extreme circumstances.

Such has been the panic at the highest European levels about the gaping impasse emerging in these budget discussions that one of the bloc’s most senior figures, European Council President Herman van Rompuy took the surprise decision several weeks ago of calling a summit of European leaders for November 22-23 that is to be dedicated solely to hammering out a budget deal. In preparation for this summit, van Rompuy this week tabled a draft budget. In it, he put more flesh — and financial numbers — on the outline budget plan, including for the first time actually putting down plainly and squarely the 20 percent climate spend figure in the negotiating texts.

There has been some relief among environment NGOs campaigning for a greener EU budget following this last minute acknowledgement of one of the budget’s clear plus points. While the EU budget has a chequered reputation for wasteful and sometimes absurd spending, a subject that has become a totemic issue for Euro-sceptics especially in the UK, the environment groups have been drawing attention to ‘well spent’ EU projects — investments in recent years that have helped transform communities in sustainable ways, and the kind of stuff that the future budget now needs to scale up.

Yet, this inclusion of 20 percent climate financing is still only breathing in a draft text. Campaigners fear that inevitable late night horse-trading at the showdown talks in Brussels next week, out of public view as all EU summits are, may result in the watering down of these climate commitments.

This would be a huge mistake. The latest World Energy Outlook (WEO) of the International Energy Agency — hot off the press this week — makes a strong economic case for investing in energy efficiency and green energy infrastructure.

Launching the Report, IEA head Maria van der Hoeven was emphatic about the potential of energy efficiency in particular, commenting that by 2035:

“We can achieve energy savings equivalent to nearly a fifth of global demand in 2010. In other words, energy efficiency is just as important as unconstrained energy supply, and increased action on efficiency can serve as a unifying energy policy that brings multiple benefits.”

On renewable energy, too, the IEA pinpoints the need for subsidies in this sector to grow globally to $4.8 trillion by 2035 if clean energy is to surpass coal as the primary global energy source. Such subsidisation may sound heavy but needs to be viewed against the current level of subsidies for fossil fuels — $523 billion in 2011 alone, according to the IEA. In other words for every dollar spent to subsidise renewables, we spend six dollars shoring up the dirty, dangerous fossil fuels which are driving climate change.

This kind of unambiguous clean energy message from the IEA surely can’t be lost on the world’s governments. In the European context, particularly with crunch budget talks due to take place in less than a week, greening the budget should be seen as part of the solution, not part of the problem — a ray of sunshine streaming through an otherwise stormy sky.